The most important moment in finance this week didn’t happen in a committee room or on cable television. It took place over coffee last week in Davos.
Brian Armstrong, the founder and CEO of Coinbase, was mid-conversation with former U.K. Prime Minister Tony Blair when Jamie Dimon stepped in, pointed a finger, and said, “You are full of s—.”
Dimon wasn’t debating crypto theory. He was defending deposits.
Armstrong had spent the week accusing large banks of leaning on lawmakers to kneecap digital-asset legislation that threatens their core franchise. Dimon, whose firm sits atop the U.S. deposit pile, heard enough. According to people familiar with the exchange, he told Armstrong to stop lying on television.
That single confrontation captured the real plot of today’s market far better than any policy memo.
This is no longer crypto versus regulators. It’s Coinbase versus the banking system.
The Deposit War Moves Into the Open
At issue is yield.
Coinbase and other exchanges want to pay customers recurring rewards—around 3.5%—for holding stablecoins. Banks pay under 0.1% on most checking accounts. The gap speaks for itself.
Banks have a monopoly on the nation’s savings. Digital assets, crypto platforms, stablecoins – what we call Dollar 2.0 – threaten that monopoly. And not just theoretically… it was happening in real time until the bank lobby got its mitts on the Clarity Act in the Senate Banking Committee hearings.
Bank lobbyists argue that allowing stablecoin yield drains deposits from community banks and weakens lending. Armstrong’s reply stays simple: pay more, compete, or innovate.
The fight over the Clarity Act is why the White House convened an emergency summit in Washington this week. Armstrong has warned publicly that Coinbase would rather have no bill than one that bans yield outright. Within hours of his post on X, a scheduled vote was postponed—an outcome that caught even veteran Washington operators off guard.
Ron Hammond of Wintermute told The Wall Street Journal, “It’s now seen more as Coinbase versus the banks rather than crypto versus the banks.”
David v. Goliath. Armstrong v. Dimon.
That framing matters. Investors levered up and speculating sold off crypto assets immediately, Coinbase shares followed, and liquidity stepped back across the whole sector.
A bout of “K-Street Violence”: Coinbase’s balance sheet remains in good shape while crypto regulation gets abused by lobbyists in Washington D.C. The company’s shares paid the price on global exchanges. (Source: Coinbase).
The White House confirmed it’s a standoff that needs to be resolved quickly. Officials are hosting another meeting next week between bank and crypto industry groups, with Trump’s AI and crypto adviser David Sacks expected to attend.
Look for a strong rebound in the crypto space when the arguing ends and the bill gets an honest vote.
Timing, Iran, and a Trader’s Shrug
Markets make opinions, we’ve often noticed. Also on the calendar this week?
One of our traders summed it up with gallows humor: “The day Trump started saber-rattling at Iran is the day crypto began to drop. BTC went from about $95,000 to the low $60s. Maybe some of it started with financial engineering meant to hurt the mullahs. Surprise— that billion you just moved is worth a lot less now. Sorry. Not sorry.”
Entertainment aside, the overlap reinforced something important.
Crypto still sits at the intersection of geopolitics, capital mobility, and sanctions. Right now, the “Too-Big-To-Fail” banks, the same ones that were the recipients of trillions in bailout capital during and after the panic of ‘08 are now trying to use the force of law to ensure the innovators don’t get anywhere near their core business: your money.
₿ Bitcoin as a Margin Case Study
Bitcoin’s historic drop deserves its own category.
BTC fell roughly 50%, before a tentative rebound this morning. The halving (not the good kind) sliced through leveraged positions built during the build up to record highs in October 2025. Open interest collapsed. Perpetual funding flipped sharply negative. Hedge funds and fast money sold to meet margin calls elsewhere.
Neither bitcoin nor digital assets as a class failed this week. Leverage gave way as it always does during price corrections.
Silver Replayed the Script—Faster
Silver delivered the same lesson at higher velocity over the past week. The route started last Friday. Overnight last night the price fell another 12%.
Prices cracked as margin requirements rose and futures traders liquidated to stay solvent. Physical buyers stayed engaged. Paper positions evaporated. We’re already hearing the anecdotal stories of the billionaires who called the shorts correctly. TikTok loves a good mythical meme.
Silver remains one of the most margin-sensitive markets on Earth. When volatility jumps, collateral demands follow. Traders sell because they must, not because they changed their minds.
Software Slides Like Telecom Once Did
Away from crypto and metals, software kept bleeding the S&P500 index.
The Goldman Sachs Software Basket is down more than 15% since the start of last week. Hedge-fund exposure fell from 7% of U.S. equity exposure to roughly 3%, according to Goldman Prime Book data.
Lou Miller, Goldman’s global head of Equity Custom Baskets, put it plainly: “buyers remain on strike even as the sector enters oversold territory.”
The rhyme here isn’t dot-coms. It’s telecom.
In the late 1990s, fiber capacity raced ahead of demand. Pricing collapsed long before usage caught up. Today’s AI build-out is healthier—funded by cash-rich giants and constrained by GPU supply—but the capital intensity feels familiar.
When returns rely on perfect adoption curves, markets eventually ask for proof.
Japan Watches Bonds While Stocks Smile
Japan offered another quiet signal worth respecting.
Equities sit near record highs. Bonds remain uneasy as fiscal expansion collides with the developed world’s highest debt-to-GDP ratio.
Goldman forecasts 6.7% equity returns over the next 12 months, a sharp slowdown from recent history. Bruce Kirk, Goldman’s chief Japan equity strategist, noted that stock investors appear unconcerned about what’s happening in the bond market.
For now.
The week clarified some market mechanics. What goes up must come down. When prices rise to historic highs, so do levels of margin debt. Speculators are the first to cover their asses when the markets crack. Three good instructive lessons this week: silver, bitcoin and software.
For the record, and to be clear to readers who are rightly concerned: our buy recommendations for precious metals, crypto and Dollar 2.0 digital assets still stand.
Our warning that AI tech stocks, including software, have gotten way ahead of themselves also stands. Software may never recover.
~ Addison
